Kentucky NMDP New Markets Development Program (NMDP) Tax Credit Package

NMDP New Markets Development Program (NMDP) Tax Credit Package
Form 8874(K) Package
41A720-S80 8874(K) (PKG) (10-23)

2023

COMMONWEALTH OF KENTUCKY

DEPARTMENT OF REVENUE
FRANKFORT

NMDP

New Markets Development Program (NMDP) Tax Credit
t	Only use this package if your entity is a qualified community development
entity (CDE) applying or approved for a Kentucky New Markets Development
Program tax credit.
t	This package contains the following forms and instructions.
	

Form 8874(K) “Application for Certification of Qualified Equity Investments
Eligible for Kentucky New Markets Development Program Tax Credit”

	

Form 8874(K)-A “Notice of Kentucky New Markets Development Program Tax
Credit and Certification”

	

Form 8874(K)-B “Notice of Kentucky New Markets Development Program Tax
Credit Recapture”

	

Form 8874(K)-C “Kentucky New Markets Development Program Tax Credit
Request for Refund of Performance Fee”

This page intentionally left blank.

41A720-S80 8874(K) (PKG) (10-23)	

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FORM

8874(K)

APPLICATION FOR CERTIFICATION OF QUALIFIED EQUITY
INVESTMENTS ELIGIBLE FOR KENTUCKY NEW MARKETS
DEVELOPMENT PROGRAM TAX CREDIT

Commonwealth of Kentucky
Department of Revenue

2023

See instructions.

A	 Name of Qualified Community	

B	 Federal Identification Number	
Development Entity (CDE)			

C	 Kentucky Corporation/LLET

Number and Street			

Telephone

City
State
					

Zip Code

Fax Number

D	 Name of parent taxpayer, if CDE is included	

E	 Federal Identification Number	
in a consolidated tax return	
of parent, if applicable	
					
		

G	 Type of Entity of CDE: 	

¨ Corporation	

			

¨  Other

H	 Submission Date of Application	
			
			
			
	 Mo.	

 /     /
Day

Yr.

¨  Limited Liability Pass-through Entity	

I	

Total Number of Taxpayers	
making Qualifed Equity Investments	
(the number should equal number	
of entries on line 6)	

Account Number (if applicable)

F	

Kentucky Corporation/LLET
Account Number of parent, if
applicable	

¨  General Partnership

J	

Total Amount of Qualified
Equity Investments for all Taxpayers
$			

	 1	 Has your entity been certified as a qualified community development entity (CDE) per IRC §45D(c) by the
		 U.S. Department of Treasury, Community Development Financial Institutions Fund (CDFI Fund)?
		 Yes _____ No _____ Date Certified ___ ___ / ___ ___ / ___ ___ (Proof of current certification with the CDFI Fund that
would include the original certification by the CDFI Fund and all subsequent updates must be attached.)
	 2	 Has your entity received a new markets tax credit (NMTC) allocation from the CDFI Fund which includes the Commonwealth
of Kentucky within the service area as set forth in such allocation agreement?
		 Yes _____ No _____ Date of the NMTC allocation ___ ___ / ___ ___ / ___ ___ (a copy must be attached)
	 3	 Does your entity include the Commonwealth of Kentucky in its service area?  Yes _____ No _____
	 4	 Identify the service area of the CDE: _______________ county_______________ state _______________multi-state
_______________ national (attach map of the service area, articles of organization that describe the service area, bylaws
that describe the service area, or other documentation that describes the service area)
	 5	 Provide information regarding the use of the proceeds from the qualified equity investments, including a description of
the qualified active low-income community business per KRS 141.432(5).
	 6	 List the name, taxpayer identifying number, type of investment (place an “X” in column to indicate whether debt or equity), and
the amount of the qualified equity investment to be made by each taxpayer:
Name

Taxpayer
Identification
Number

	

Total Qualified Equity Investments for all taxpayers (this should equal the amount in Item J).
If additional space is needed, attach schedule listing the above information.
41A720-S80 8874(K)(10-23)	

Type of
Investment
Equity	
Debt

Purchase Price
of the Qualified
Equity Investment

00
00
00
00
00
00
00
00
00
00
Page 3 of 12

2023

Form 8874(K)
(2023)

	

7	 Include a nonrefundable application fee of $1,000 with this application. Payment of the fee must be by cashier’s
check. A separate check must be issued for the nonrefundable application fee.

	 8	 Include a refundable performance fee with this application equal to one-half of one percent (0.5%) of the qualified
equity investment requested to be certified, not to exceed $500,000. Payment of the fee must be by cashier’s
check. A separate check must be issued for the refundable performance fee.	

	 Under penalties of perjury, I declare that the applicant’s allocation agreement remains in effect and has not been revoked or
canceled by the CDFI Fund; and that I have examined the application, including all accompanying documents and statements,
and to the best of my knowledge and belief, it is true, correct, and complete.
	 _ ____________________________________________ 	
		 Signature of executive officer of CDE	

______________________________________________
Date

	 _ ________________________________________________________________________________________________
	
Type or print name and title

Department of Revenue Use Only
The application is approved  __________
The application is not approved (see attached explanation)  __________
		

By:  _______________________________________ 	 Date:  _ __________________

Mail to Department of Revenue, Division of Corporation Tax, Station 52, 501 High Street, Frankfort, KY 40601-2103.

41A720-S80 8874(K)(10-23)	

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Form 8874(K)
(2023)

INSTRUCTIONS—APPLICATION FOR CERTIFICATION OF QUALIFIED
EQUITY INVESTMENTS ELIGIBLE FOR KENTUCKY NEW MARKETS
DEVELOPMENT PROGRAM TAX CREDIT

2023

A qualified community development entity (CDE) that seeks to have an equity investment or long-term debt security certified as a
qualified equity investment and eligible for the tax credit permitted by KRS 141.434 must file this application, Form 8874(K), with
the Kentucky Department of Revenue (department).
The following fees must be included with the application: (i) a nonrefundable application fee (payment must be by cashier’s
check) of $1,000 (a separate check made payable to the Kentucky State Treasurer must be issued for the nonrefundable
application fee); and (ii) a refundable performance fee (payment must be by cashier’s check) equal to one-half of one
percent (0.5%) of the qualified equity investment requested to be certified, not to exceed $500,000 (a separate check
made payable to the Kentucky State Treasurer must be issued for the refundable performance fee).
The department will notify you within thirty (30) days after receipt of the application whether the application is approved or denied.
If the department intends to deny your application, you will be notified in writing (via certified mail) by the department of the reason
for denial. Upon receipt of the notice of denial, the CDE has fifteen (15) days to provide the department with information necessary
to correct any deficiencies in the application. Upon receipt of any additional information, the department has an additional thirty
(30) days to either approve or deny the application.
If the CDE fails to provide the additional information required by the department or fails to complete its application within the
fifteen (15) day period, the application will be deemed denied and must be resubmitted in full with a new submission date. If the
application is deemed denied, the department will refund the performance fee in full to the CDE.
If the department determines that the application is in compliance with the provisions of KRS 141.432 to 141.434, a copy of the
application will be returned to you (via certified mail) containing the department’s approval of the qualified equity investments
and taxpayers eligible for tax credits under KRS 141.434. “Department’s approval” means the department’s certification per
KRS 141.433(3) of the proposed equity investments or long-term debt securities as qualified equity investments eligible for tax
credits per KRS 141.432 to 141.434. If the tax credits are limited because of the $10 million tax credit cap per KRS 141.434(4),
the department will notify the CDE of the limitation and the CDE may either elect to withdraw its application or receive a partial
credit. If the CDE elects to withdraw its application, the department will refund the performance fee in full to the CDE. If the CDE
elects to receive a partial credit, the department will refund a portion of the performance fee, whereby only the fee applicable to
the certified amount is retained.
If the taxpayers eligible to claim the credits change due to a transfer of a qualified equity investment or a change in an allocation
per KRS 141.434(2), the CDE must notify the department of such change.
Within ninety (90) days after receipt of the notice of certification by the department, the CDE will issue the qualified equity investment
and receive cash in the amount of the certified purchase price. The CDE will provide the department with evidence of the receipt
of the cash within ten (10) business days after receipt. If the CDE does not receive cash in exchange for the total amount of the
qualified equity investment within ninety (90) days following receipt of the certification notice from the department, the certification
will lapse, and the entity may not issue the qualified equity investment without reapplying to the department for certification. In
addition, the entire performance fee will be forfeited.
The CDE must complete Form 8874(K)-A, Notice of Kentucky New Markets Development Program Tax Credit and Certification,
and file a copy with the department for each taxpayer as evidence of the receipt of cash for the qualified equity investment. If the
department is satisfied that the cash amount of the qualified equity investment was received by the CDE from the qualified equity
investor, the department will return Form 8874(K)-A containing the department’s approval of the tax credit to both the CDE and
taxpayer.

41A720-S80 8874(K)(10-23)	

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This page intentionally left blank.

41A720-S80 8874(K)(10-23)	

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FORM

8874(K)-A

NOTICE OF KENTUCKY NEW MARKETS
DEVELOPMENT PROGRAM
TAX CREDIT AND CERTIFICATION

Commonwealth of Kentucky
Department of Revenue

2023

See instructions.

A	 Name of Qualified Community	

B	 Federal Identification Number	
Development Entity (CDE)	
of CDE	
					

C	 Kentucky Corporation/LLET

D	 Name of taxpayer making the qualified	

E	 Identification number of taxpayer 	
equity investment	
	 	
					
					

F	

Number and Street (taxpayer’s address)
				
	
					
					

G	 Certified purchase price of

City

Account Number (if applicable)
of CDE

Kentucky Corporation/LLET
Account Number (if applicable)
of taxpayer			

the taxpayer’s qualified equity
investment

State

Zip Code

					
$
									

H	 Date the CDE received cash for	

I	

taxpayer’s qualified equity investment
			

¨  Individual	

 /     /

			
	

Mo.	

Day

What type of entity is the taxpayer? 	
¨  Estate	

¨ Corporation	 ¨  S Corporation	

¨  Trust	

¨  General Partnership

¨  Limited Liability Pass-through Entity	

Yr.

	 Under penalties of perjury, I declare that I have examined this form, including all accompanying
documents and statements, and to the best of my knowledge and belief, it is true, correct, and
complete.
		

_ __________________________________	

		

_ _________________________________________________________________________

		

		

___________________________________

Signature of executive officer of CDE	

Date

Type or print name and title

Department of Revenue Use Only
	
1	 Total Allowable Credit
		 (add lines 2(a) through 2(g))	

$		

	

2	 (a)	 Allowable credit:  Year 1	

$	

0	

		 (b)	 Allowable credit:  Year 2	

$	

0	

		 (c)	 Allowable credit:  Year 3 (7%)	

$	

		 (d)	 Allowable credit:  Year 4 (8%)	

$	

		 (e)	 Allowable credit:  Year 5 (8%)	

$	

		 (f)	 Allowable credit:  Year 6 (8%)	

$	

		 (g)	 Allowable credit:  Year 7 (8%)	

$	

		 The above tax credits are approved for each year.
		

By:  _______________________________________ 	 Date:  _ __________________

Mail to Department of Revenue, Division of Corporation Tax, Station 52, 501 High Street, Frankfort, KY 40601–2103.

230320 41A720-S81 (10-23)	

Page 7 of 12

Form 8874(K)-A
(2023)

INSTRUCTIONS—NOTICE OF KENTUCKY NEW MARKETS
DEVELOPMENT PROGRAM TAX CREDIT AND CERTIFICATION

2023

Per KRS 141.433(4), cash in the amount of the certified purchase price of the qualified equity investment must be received
by the qualified community development entity (CDE) from each taxpayer in exchange for the taxpayer’s qualified equity
investment within ninety (90) days after receipt of the approved application (Form 8874(K)) by the CDE. The CDE must
provide the department with evidence of the receipt of the cash in exchange for the qualified equity investment within ten
(10) business days after receipt of the cash. If the CDE does not receive cash in the amount of certified purchase price of
the qualified equity investment within ninety (90) days following receipt of the application approved by the department, the
certification of the taxpayer will lapse and the CDE may not issue a qualified equity investment without filing a new application
with the department.
A CDE must file this form (Form 8874(K)-A) with the department for each taxpayer as evidence of the receipt of the cash
for the taxpayer’s qualified equity investment.
If the department is satisfied that the cash amount of the qualified equity investment was received by the CDE, a copy of
Form 8874(K)-A will be returned to the taxpayer and CDE with the department’s approval of the tax credit available to the
taxpayer for each of the next seven years.
A taxpayer must attach a copy of the approved Form 8874(K)-A to the tax return each year to claim the tax credit against
the taxes imposed by KRS 141.020, 141.040, 141.0401, 136.320, 136.330, 136.340, 136.350, 136.370, 136.390, or 304.3270. For the tax credit against taxes imposed by KRS 141.020, 141.040, or 141.0401, the ordering of the credits will be as
provided by KRS 141.0205. An insurance company claiming a tax credit against the insurance premium tax is not required
to pay additional retaliatory tax levied pursuant to KRS 304.3-270.
A partner, member, or shareholder claiming the tax credit must attach a copy of Schedule K-1, Form PTE to the tax return
each year to claim the tax credit.
If there is an event per KRS 141.433(6) which would result in the recapture of any portion of the tax credit previously approved:
(i) the CDE must notify the department upon discovery of such event; or (ii) the department upon discovery of such event or
after receiving notice from the CDE of such event must provide written notice (via certified mail) of the proposed recapture
to the CDE per KRS 141.433(6)(b).
If the CDE fails or is unable to cure the deficiency per KRS 141.433(6)(b), the department must notify the CDE and each
taxpayer of the amount of the recapture or the balance of the tax credit on Form 8874(K)-B.

41A720-S81 8874(K)-A (10-23)	

Page 8 of 12

FORM

8874(K)-B

NOTICE OF KENTUCKY NEW MARKETS
DEVELOPMENT PROGRAM
TAX CREDIT RECAPTURE

Commonwealth of Kentucky
Department of Revenue

2023

 See instructions.

A	 Name of Qualified Community	

B	 Federal Identification Number	
Development Entity (CDE)	
of CDE	
					

C	 Kentucky Corporation/LLET

D	 Name of taxpayer making the qualified	

F	

Account Number (if applicable)
of CDE

E	 Identification number of taxpayer 	
equity investment	
	 	
					
					

Kentucky Corporation/LLET
Account Number (if applicable)
of taxpayer			

Number and Street (taxpayer’s address)		 	
G	 Certified purchase price of
					
the taxpayer’s qualified equity
					
investment
					
City
State
Zip Code
									
									
$

H	 Date the CDE received cash for taxpayer’s 	

I	

qualified equity investment
			

 /     /

			
	

Mo.	

Day

What type of entity is the taxpayer? 	

¨  Individual	

¨  Estate	

¨  Trust	

¨  General Partnership

¨ Corporation	

¨  S Corporation	

¨  Limited Liability Pass-through Entity

Yr.

J	

K	 Explanation of recapture

Date taxpayer’s qualified equity investment	
was subject to recapture	

 /     /
	

Mo.	

Day

Yr.

Original
Tax Credit

	

1	 Total (add lines 2(a) through 2(g)).............. 	

	

2	 (a)	 Year 1.................................................. 		

		

(b)	 Year 2.................................................. 		

		

(c)	 Year 3.................................................. 	

		

(d)	 Year 4.................................................. 	

		

(e)	 Year 5.................................................. 	

		

(f)	 Year 6.................................................. 	

		

(g)	 Year 7.................................................. 	

Decrease
of  Tax Credit

Balance of
Tax Credit

Tax Credit Claimed
by  Taxpayer

		
		

	
3	 If the Tax Credit Claimed by Taxpayer on line 1 is greater than the Balance of Tax Credit on line 1,
		 enter the recapture of the tax credit on this line.............................................................................................. 	
		
	4	
If the Balance of Tax Credit on line 1 is greater than the Tax Credit Claimed by Taxpayer on line
		 1, 	enter the balance of the tax credit on this line............................................................................................ 	

	

	
		

Department of Revenue Use Only
Recapture of Tax Credit Amount	 _____________________
By:  _______________________________________ 	 Date:  _ __________________

230321 41A720-S82 (10-23)	

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Form 8874(K)-B
(2023)

INSTRUCTIONS—NOTICE OF KENTUCKY NEW MARKETS
DEVELOPMENT PROGRAM TAX CREDIT RECAPTURE

2023

If there is an event per KRS 141.433(6) which would result in the recapture of any portion of the tax credit previously approved:
(i) the qualified community development entity (CDE) must notify the department upon discovery of such event; or (ii) the
department upon discovery of such event or after receiving notice from the CDE of such event must provide written notice
(via certified mail) of the proposed recapture to the CDE per KRS 141.433(6)(b).
If the CDE fails or is unable to cure the deficiency within ninety (90) days after receiving the department’s original notice
of recapture per KRS 141.433(6)(b), a copy of this form (Form 8874(K)-B) will be sent by the department to the CDE and
each taxpayer showing the amount of the tax credit recapture or balance of the tax credit. If the taxpayer is a pass-through
entity, a Form 8874(K)-B will also be sent to each partner, member, or shareholder showing the partner’s, member’s, or
shareholder’s tax credit recapture or balance of the tax credit.
If Form 8874(K)-B, Line 3 shows a recapture of tax credit, the taxpayer or a partner, member, or shareholder of a taxpayer
must attach a copy of Form 8874(K)-B to the tax return for the tax year that includes the credit recapture date and enter the
tax credit recapture on the applicable line of the tax return.
If Form 8874(K)-B, Line 4 shows a tax credit balance, the taxpayer or a partner, member, or shareholder of a taxpayer
must attach a copy of Form 8874(K)-B to the tax return each year to claim the tax credit against the taxes imposed by KRS
141.020, 141.040, 141.0401, 136.320, 136.330, 136.340, 136.350, 136.370, 136.390, or 304.3-270.

41A720-S82 8874(K)-B (10-23)	

Page 10 of 12

FORM

8874(K)-C

KENTUCKY NEW MARKETS DEVELOPMENT PROGRAM
TAX CREDIT REQUEST FOR REFUND OF PERFORMANCE FEE

Commonwealth of Kentucky
Department of Revenue

2023

 See instructions.

A	 Name of Qualified Community	

B	 Federal Identification Number	
Development Entity (CDE)	
of CDE	
					

C	 Kentucky Corporation/LLET

Number and Street (taxpayer’s address)		 	
					
					

D	 Certified purchase price of

Account Number (if applicable)
of CDE

the qualified equity investment

City
State
Zip Code
									

									
E	

Date of this request for refund of performance	
fee
			
	 		
	 		

 /     /

	

Mo.	

Day

Yr.

F	

$

What type of entity is the CDE? 	

¨ Corporation	

¨  Limited Liability Pass-through Entity	

¨  General Partnership	

¨  Other________________________________________

	 1	 Enter the amount of the qualified equity investment certified by the department which the
		 CDE received cash in exchange for qualified equity investment within 90 days after the
		 qualified equity investment was certified.......................................................................................................	1	

00

	 2	 Enter the amount of the qualified equity investment in qualified active low-income community
		 businesses located in the Commonwealth 12 months after the CDE received cash in exchange
		 for the qualified equity investment.................................................................................................................	2	00

%
	 3	 Divide line 2 by line 1 and enter the resultant percentage here.....................................................................	3	
		
	4	
Percentage required to be invested outlined under KRS 141.433(6)....................................................... 	4
100%
		
	 5	 If line 3 is smaller than line 4, subtract line 3 from line 4 and enter the resultant percentage
		 here; otherwise, enter 0%.......................................................................................................................	 5	
%
	
			
		
	 6	 Enter the refundable performance fee paid by the CDE............................................................................	 6	
00
		
	7	
Multiply the percentage on line 5 by the amount on line 6, this is the amount of the forfeited
		performance fee......................................................................................................................................	7	00
	8	
Subtract the amount on line 7 from the amount on line 6 and enter here; this is the amount
		 of performance fee to be refunded......................................................................................................	8	
00
Under the penalty of perjury, I declare that I have examined the information on this form, including all accompanying documents and
statements, and to the best of my knowledge and belief, it is true, correct, and complete.

	 _ ____________________________________________ 	
		 Signature of executive officer of CDE	

___________________________________________
Date

	 _ _____________________________________________________________________________________________
	
Type or print name and title

Department of Revenue Use Only
A refund of the performance fee is approved in the amount of.......................................................	 _ __________________
		

By:  _______________________________________ 	 Date:  _ __________________

Mail to Department of Revenue, Division of Corporation Tax, Station 52, 501 High Street, Frankfort, KY 40601-2103.
41A720-S83 8874(K)-C (10-23)	

Page 11 of 12

Form 8874(K)-C
(2023)

INSTRUCTIONS—KENTUCKY NEW MARKETS
DEVELOPMENT PROGRAM TAX CREDIT
REQUEST FOR REFUND OF PERFORMANCE FEE

2023

KRS 141.433(8)(c)3 provides that a qualified community development entity (CDE) may request a refund of the performance
fee no sooner than thirty (30) days after having met all the requirements of KRS 141.433(8). The refund request must be
made in writing to the department (the submission of this form will comply with this requirement). The department must review
the refund request within thirty (30) days, and will either comply with the request and issue the refund of the performance
fee, without interest, if the CDE has met all of the requirement of KRS 141.433(8), or give written notice to the CDE that it is
noncompliant and subject to possible forfeiture of the fee.
The entire amount of the fee will be forfeited if the CDE, or any subsidiary of the CDE, fail to issue the total amount of
qualified equity investment certified by the department and receive cash in exchange therefore within ninety (90) days after
receipt of the notice of certification.
A portion of the performance fee will be forfeited if the CDE, or any subsidiary of the CDE, that issues a qualified equity
investment certified by the department fails to meet the percentage of investment required by KRS 141.433(6) by the first
allowance date of the qualified equity investment. The forfeiture will be proportionate to the amount of the qualified equity
investment that is not invested as required by KRS 141.433(6). Forfeiture of the fee will be subject to the ninety (90) day cure
period allowed under KRS 141.433(6)(b).
SPECIFIC INSTRUCTIONS
Line 3—Convert Line 3 to a percentage carried out to two decimal places.
In the case of a qualified equity investment issued on or after January 1, 2014, the qualified community development entity
must invest at least one hundred percent (100%) of the purchase price of the qualified equity investment in qualified lowincome community investments in qualified active low-income community businesses located in the Commonwealth within
twelve (12) months of the issuance of the qualified equity investment and maintain this level of investment in qualified lowincome community investments in qualified active low-income community businesses located in the Commonwealth until the
last credit allowance date for the qualified equity investment. In this case, the department’s recapture will be proportionate
to the amount of the redemption or repayment with respect to the qualified equity investment.
REQUIRED ATTACHMENTS
Proof of certification and proof that the requirements under KRS 141.433(8)(d) have been met are required to be
included with the submission of this form.

41A720-S83 8874(K)-C (10-23)	

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